The following note, sent this afternoon by the bank that is also the world's largest currency trader, best captures the futility of trying to make any sense of today's "market" reaction.
So somehow we have embraced the theme that was with us through January. On a day when inflation beats in the US (incidentally retail sales missed): stocks are up, yields are up and the USD lower does not add up.
On the inflation side, that fact that Central Banks, especially the Fed, may need to be more aggressive, certainly makes some of the conditions suggested above, questionable at best. So does US curve steepening.
When the layers of the onion get peeled away, EM and commodity currencies will have a lot to think about as yields push up.
I completely disagree with some of the USD moves, especially AUD and CAD. Rates in the US look ready to extend.
Wake up folks, it is not risk positive.
Judging by the nearly 70 points surge in S&P futs off the lows, the "market" completely disagrees with this disagreement.